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11.12 Calculation of Dividends-Based Value. Royal Dutch Shell (Shell) is a petroleum and petrochemicals company. It engages primarily in the exploration, production, and sale of crude oil and natural gas and the manufacture, transportation, and sale of petroleum and petrochemical products. The company operates in approximately 200 countries in North America, Europe, Asia-Pacific, Africa, South America, and the Middle East. Assume that during the past three years (Year 2,1, and 0 ), Shell generated the following total dividends to common equity shareholders (in USD millions): Analysts project 5% growth in earnings over the next five years. Assuming concurrent 5% growth in dividends, the following table provides the amounts that analysts project for Shell's total dividends for each of the next five years. In Year +6, total dividends are projected for Shell assuming that its income statement and balance sheet will grow at a long-term growth rate of 3%. At the end of Year 0, Shell had a market beta of 0.71. At that time, yields on intermediate-term U.S. Treasuries were 3.5%. Assume that the market required a 5.0% risk premium. Suppose Shell had 6,241 million shares outstanding at the beginning of Year +1 that traded at a share price of $24.87. a. Calculate the required rate of return on equity for Shell as of the beginning of Year +1. b. Calculate the sum of the present value of total dividends for Years +1 through +5. c. Calculate the continuing value of Shell at the start of Year +6 using the perpetuity-withgrowth model with Year +6 total dividends. Also compute the present value of continuing value as of the beginning of Year +1